La Plata County Business Report Premier Edition

Cover Story: Southwest Ag (SWAG) The Hillyer Family Success Story

Branding: Let’s suppose you’re in business for the money!

The Economy: In tatters? What now? The business community and planning departments share their forecasts and strategies

HR Workshop: How to Turn Managers into Leaders ...Before They Go Bad!

Premiere Edition

INSIDE:

2 La Plata County Business Report 2009

La Plata County Business Report 2009 3

4 Welcome

6 Cover Story: Southwest Ag and the Hillyers

14 The Branding Workshop:Let’s Suppose You’re in Business

for the Money

20 Economic Report: The economy’s in tatters; the unemployment

is at its highest rate in 25 years; What Now?

44 HR Workshop: How to Turn Managers into Leaders...

Before They Go Bad!

PublisherRichard Ballantine

Marketing ManagerDennis Hanson

General ManagerSharon Hermes

Design ManagerBrady Sutherlin

Section Editor/DesignerDavid Ohman

Advertising Design/PrepressMitchell Carter, Brady Choat, Jennifer Dickens,

Terry Swarbrick, Michelle Uhl, Linda Vona,

Tracy Willbanks

Account ExecutivesCyrilla Cass, Darryl Hunt, Karolann Latimer,

Shawna Long, Debby Morgan, Susan Wright

Account AssistantsErrin Kent, Larissa Lopez, Andrea Palli

The La Plata County Business Report

is a publication of

Advertising Department

To see the online version of the La Plata County Business Report,

go to: www.durangoherald.com

The Durango Herald uses reasonable effort toinclude accurate and up-to-date information for its

magazine publications. However, all general informa-tion comes from a variety of sources and may changeat any time for any reason. To verify specific informa-

tion, refer to the organization or business noted.

On the Cover: The Hillyer Family, owners of Southwest Ag (SWAG)

headquartered in Gem Village. Photo: David Ohman

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Welcome to the pre-

miere edition of theLa Plata CountyBusiness Report. Thelaunch of this newbusiness magazine was

not a decision born of caprice. With a recessionchallenging our economic engine, the time wasright to publish a new magazine reflecting the per-spectives and interests of the business communityand our civic leaders. For those opinions on busi-ness, we took a cross-section sampling from largebusinesses, small businesses, consultants and inde-pendent contractors. We examined the currenteconomic climate and plans for the future inDurango, Bayfield and Ignacio.

With some exceptions, most people inour region have been affected by the national eco-nomic meltdown. However, the effects on oureconomy are relative to the rest of the state andthe nation. Simply put, our “boom” and “bust”cycle just was not as volatile as it might have been.

Nevertheless, effects of varying degrees arebeing felt throughout La Plata County. To helplocal entrepreneurs to navigate through the econo-my toward more prosperous time ahead, we wantto offer what we believe to be important informa-tion you can use over the next several months, oreven the next few years, depending on how therecovery tracks through the region.

Economic history tells us, neither econo-mists, pundits, nor politicians have accurately pre-dicted when a recession would be over until they,and we, all looked in the rear-view mirror. Has itreached bottom? When is the turnaround? Whenwill we finally be on the uphill run on the bellcurve? When will hiring return? This is prettymuch uncharted territory.

The hardest hit businesses in La PlataCounty have been those associated with autosales, real estate, and homebuilding with the tan-gential businesses including architects, landscap-ing, subcontractors and building material suppli-ers. Home remodeling, upgrades and repairs havetaken an upward shift replacing the desire to“move up” to larger digs. These businesses arethe most credit-driven in the area relying on

lenders for those large-ticket purchases while thecredit market has been getting tighter.

We lead off with our cover story featuringSouthwest Ag (SWAG) in Gem Village and howthe founders, Dennis and Becky Hillyer, grew a family business from scratch into a dominantplayer in the farm and construction equipmentmarket.

Have you ever wondered how to brand yourcompany, or even what your brand really is?“Let’s suppose you’re in business for the money.”Our story about your company’s brand image willhelp you improve your market share in a compet-itive environment. For instance, did you knowthat your brand is composed of visual and behav-ioral dynamics?

In our effort to offer a broad overview onhow the current recession is affecting entrepre-neurs and governments, we offer their insights onthe state of our local economy and how they arerethinking their business and planning paradigmsfor success.

Human resources management is a very com-plex asset for any company. Working nearly inthe shadows, these managers are mistakenly per-ceived simply as those people we meet for a jobinterview or when leaving the company.

However, along with monitoring employeebenefits programs and retirement plans, they arealso involved with employee development. Andthat means promotions, often into a managementrole. But, on occassion, that new manager missesthe concept of his dual role as a team player andteam leader. Thus, employment law attorney,Lynne Sholler, offers tips on how to turn man-agers into leaders, “before they go bad.”

As feedback arrives from this first edition ofLa Plata County Business Report, we will contin-ue to offer insights reflecting the needs and viewsof our business community. Until then, we hopeyou’ll find this new publication to be a resource of useful business information.

The La Plata County

Business Report:

Your navigation tool

for a changing

economy

Welcome


Looking north on Main Avenue in downtown DurangoPhoto: David Ohman


COVER SPOTLIGHT ON: SOUTHWEST AG

THE HILLYER FAMILY:THE REAL DEAL

Twenty-seven years ago, Dennis and Becky Hillyer took a leap of faith and, combined with their long-range vision,

altered the landscape of The Four Corners and beyond.Story and photos by David Ohman

Aerial photo courtesy of Southwest Ag


Heading south and east outof Durango on Highway 160highway the view is one ofrolling farmlands and lushpastures dotted with horsesand cattle. Then, of course,there are the scattered nat-ural gas wellheads sprout-

ing like industrial saplings. It was late in themorning and the air hung with monsoon-drivenhumidity signaling thunderstorms were on the way.

About 15 minutes past Elmore’s Corner, the highway bends eastward into a long straight-away on the final approach into the Town ofBayfield. And it’s on this abbreviated patch ofhighway where you’ll find Gem Village, not atown per se. But it is a community, at least inspirit.

At first glance, it’s a featureless collection ofhomes and sundry small businesses. Theexception is a massive, bright shock of orangepaint off to the left side along the frontage road.You just can’t miss it as you drive by. This isthe home of Southwest Ag, locally known asSWAG, one of the most successful dealers inthe United States for industrial equipment giant,Kubota Ltd. of Japan. While this is not the onlybrand you’ll find here, all manner of brightorange Kubota equipment fills a large part ofthis expansive property. The brand has alsoplayed an important role in the growth curve ofSWAG as an independent dealer for Kubota,and one of the few U.S. dealers offering “fulllines and full service” for the brands they carry.

The Hillyer Family from left:Dennis, Rich, Becky and Garry


When you consider, the “Big Three” of thetractor business has, for decades, beenJohn Deere, Case-New Holland andAGCO, Kubota's rapid ascent to theposition as the “fourth major” tractormanufacturer since entering the U.S. in

1972 is quite a success story. It was around the same timethat Honda introduced the Civic coupe. A new era wasborn.

The SWAG story is really an American Success Storyabout how Dennis and Becky Hillyer created a small busi-ness and built it into a local business empire.Yet, despite allof the success, they never forgot their roots, family and

sense of community.Before launching their company, Dennis was the assis-

tant manager at Basin Co-Op. They had been a Kubotadealer for about 2 1/2 years or so when he felt his entre-preneurial soul percolating to the surface.

Dennis believed that, as a co-op, the wheeling anddealing aspects of the tractor business were not compatiblewith maintaining appropriate profit margins. When BasinCo-Op decided to stick with selling commodities and get outof the tractor business, Dennis decided this was the righttime to start his own business. He referred to the arrange-ment as one of “iron vs. commodities.”

Dennis was quick to note that, in the course of going his

This is the home for Southwest Ag in Gem Village, a sprawling butefficient property that was once, “a weed farm” until the Hillyersmoved in. Photo courtesy of the Hillyer Family archives.


own way, there were no burning bridges in the rear-viewmirror. To this day, there remains a rock-solid friendshipand business relationship with Basin Co-Op.

With a couple of partners and the full support of hiswife, Becky, the business was launched in the Grandviewarea. From the outset, while Dennis worked on promotionand sales, Becky taught herself bookkeeping and account-ing, a skill her husband unabashedly credits with keepingthe business together through thick and thin. Though theodds of success seemed a bit thin at the time, they start-ed with equipment rentals to get the cash-flow heading inthe right direction. Their business expanded with the addi-tion of outdoor power equipment. Dennis refers to their

tractor business as a “tractor package” concept. A one-stop-shopapproach where they could not only sell or rent the tractor thecustomer needed, they provided all of the necessary attach-ments to accommodate the specialized need for the equipment,plus delivery and service.

About five years into their venture, the Hillyers bought outtheir partners. And as the business outgrew its original home, itbecame clear that a new location with plenty of room for expan-sion was necessary. In 1987, they found the current property withan affordable lease-with-option-to-buy in Gem Village, an areadominated by weeds, said Dennis. A very successful "mom &pop" business grew out of the rubble.

The business model that grew from that weed-strewn prop-erty is a statement of an acute entrepreneurial vision and anunfailing determination to succeed. Dennis realized he wanted tobuild a company where customers could find complete lines ineach brand while providing the service to back up the sale.Rentals have also played a key role in developing a strong cus-tomer following. Their reach now exceeds a 300 mile radiusthroughout the Four Corners, including Santa Fe and Taos.

“Make hay while the sun’s shining”

Dennis introduced more than 35 innovations toaccommodate a growing demand for higher pro-ductivity to a farming community with a fairly shortgrowing season: the end of winter and the start ofwinter. So he brought new ways for ranchers andfarmers to be more efficient in the limited time they

had and the budgets needed to turn a profit after turning the soil.Some of those innovations included post drivers, high-efficiencyhay tools, power tillage, “no-till” equipment for reseeding withoutthe need to re-till the soil, and boomless spraying systems.Staying ahead of the curve has allowed the Hillyers to maintaintheir position as the one-source company for equipment, infor-mation, and service on everything they sell and rent.

One of the creative marketing drivers for sales Dennis devel-oped was the equipment rental division. Rather than offeringdemos for customers to try at no cost, he knew that if they rent-ed that equipment, there was a strong likelihood that the cus-tomer would decide to buy it. And the deal was made even eas-ier by applying the rental fees toward the purchase. When cus-tomers are thinking big ticket investments, Dennis has made it aseasy as possible for the customer to take home the equipmentneeded for the long run.

When October arrives, SWAG runs an end-of-season saleon their rental equipment. Unlike cars and trucks, constructionand farm equipment wear is based on hours of use, like aircraft,rather than miles. Most of SWAG’s rental equipment has about500 hours of use. Since 5,000 hours is the equivalent of about100,000 miles on a road vehicle, the rental fleet sold at season’send is quite a bargain. This is also a win-win situation for SWAGand Kubota since all of that sold equipment will have to bereplaced with the newest and best available.


The Hillyers standing amidst a group ofKubota tractors, from left, Rich, Dennis,Becky and Garry HIllyer.

As a family-run business, the Hillyers

have managed to find the perfect

balance between strategic, long-range

planning, and the tactical, day-to-day

management skills, a combination

not easily found in most family busi-

nesses, or between business partners

for that matter.

After 27 years in business together,

this year marks Dennis and Becky’s

44th wedding anniversary. Clearly, all

of the hard work and the goals they

have achieved together just made

their marriage all the better for it.

With their two sons, Garry and Rich,

sharing the helm of the business,

Dennis said, “I’m living a father’s

dream. As a family, we’re closer

than ever before.


One of the newest lines they carry is an Italian tractorby Antonia Carraro. This tractor is compact and bi-direc-tional (steering fore and aft), and paired with anotherItalian tradition, more horsepower. Its maneuverabilitymakes it ideal for snow removal, field work and a full rangeof multitask applications. Easy to transport and armed witha large selection of accessories, this specialty equipmentis sure to be a winner.

What seems incontrovertible is Dennis Hillyer’s posi-tion as a guru of sorts to the farm and ranch industrythroughout the Four Corners. Farmers and ranchers havecounted on Dennis as a source of information on what theyneed for now and the future. He has, in essence, becomethe brand for Southwest Ag.

Over the years up to the present, the Hillyershave seen a new kind of farm and ranch cus-tomer: the lifestyle farmer. These customersmoved out of the cities “with saddlebags fullof money” as it were, to become gentlemanfarmers with more passion than experience

for living life on a rural landscape. They have become amajor part of the rental business and have come to rely onthe Hillyers for sound advice. Those rentals have oftenturned into sales in other parts of the store.

The business model for SWAG has never stoppedevolving while Dennis and Becky worked toward their 20-year retirement goal, of building a business that could besold to fund their retirement. When it came time to thinkabout selling the business, they also held out the dream ofturning over to their two sons, Garry and Rich. At first,since their sons were already successful, they weren’t allthat confident that such a deal would happen. But, to theirsurprise and joy, it all fell into place as a dream come true.

Garry and Rich are now sharing the helm runningSWAG. They grew up with the business and yet, there wasno certainty that they would take over from their parents.Garry, a graduate of University of Arizona with a degree inlandscape architecture, gave up his lucrative practice as alandscape architect to join the family business. Rich, abasketball standout at FLC, graduated with a degree inbusiness. After taking a year away from the business, hedecided he wanted to be a part of taking the family busi-ness into the future. No one will be surprised if their chil-dren will want to carry on the tradition.

Becky continues to keep the books humming in perfectsynch. “She’s been our rock from the very beginning,”Dennis said. “None of this success would have been pos-sible without her.” Becky is equally adamant about credit-ing her husband’s long-range vision for their success.Without hesitation, as a family-run business, the Hillyershave managed to find the perfect balance between strate-gic, long-range planning, and the tactical, day-to-day man-agement skills, a combination not easily found in most

family businesses, or between business partners for thatmatter.

Are there any secrets to their success? The Hillyersare emphatic:

1. When starting a business with a spouse, make sureyou have a great marriage that will withstand the upsand downs of the journey.

2. To create a loyal customer following, hitch yourwagon to the top brands and link it to uncompromis-ing customer service.

3. Never stop listening to the customers.

4. Don’t let the business become stagnant; be willingto make changes before it’s too late to do so.

5. There will always be opportunities to make mis-takes; learn from them and make the necessarycourse corrections.

6. Diversify with full lines of premium brands that willnot betray your relationship with the customer (leavethe secondary brands to the big box chains). Fromcompact construction equipment to chain saws,accessories, and parts and service, these productsand services have been hallmarks of the SWAG brand.

In fact, Dennis doesn’t see the big box operations suchas Lowe's and Home Depot as competition. His focus onfull lines of premium brands with full service to back up thesale, trumps the big box price points on selected items ineach brand, suggesting that customers view big box pur-chases as an “expense,” while customers come to SWAGas an “investment.”

With all of this success, have the Hillyers consideredbranching out? Kubota has over 1,000 dealers across theUnited States and SWAG is already in the top 20 single-store dealers. To duplicate the current operation, saysDennis, would require an enormous cash infusion and,frankly, they're happy with what they have built.

While it is not uncommon for couples to venture intobusiness together, it is quite common for those marriagesto dissolve under pressure. Not so for Dennis and BeckyHillyer. After 27 years in business together, this year marksDennis and Becky’s 44th wedding anniversary. Clearly, allof the hard work and the goals they have achieved togeth-er just made their marriage all the better for it. With Garryand Rich now running the business, Dennis said, “I’m liv-ing a father’s dream. As a family, we’re closer than everbefore.”

BRANDINGWORKSHOP

LET’S SUPPOSE YOU’RE INBUSINESS FOR THE

MONEY!

Story by David Ohman

ATTRACT NEW BUSINESS AND IMPROVEYOUR MARKET SHARE WITH VISUAL

AND BEHAVIORAL BRANDING



There is an old axiom in marketing: “If youdon’t brand yourself, your competitorswill do it for you.”

Whether you own an establishedcompany or a new startup, how your tar-get audience perceives you and your com-pany is your brand. It’s not simply abouta logo, brochure or web site. It’s about

developing your desired market share. You are in competition withother companies going after the same finite customer base. Alongwith the quality of the product or service you’re offering, there isalso that intangible called, “customer service.” We’ll get to thatlater.

The battle for your customer’s mindAfter all these years, one of the great and timeless books on

branding remains, Positioning: The Battle for Your Mind, by AlRies and Jack Trout. This should be required reading for any busi-ness owner or product manager. It’s a subject requiring more spacethan we have here. But suffice to say, the timeliness and quality ofany product development or service is crucial in any company’sbranding plans.

For the past 25 years, few companies have understood theconcept of taking that concept forward better than Apple,Incorporated (formerly Apple Computer). Under the leadershipof the arguably mercurial visionary, Steve Jobs, Apple has suc-ceeded with exciting products with equally exciting product design.Who could have imagined that Apple’s stock price would bequadruple that of Microsoft? How did they do it? When theyopened the Apple Stores in major shopping malls, customersflooded in to see the new iMacs, iPods, then the iPhone. The iPoditself drove Macintosh sales for a few years until those loyal cus-tomers started buying everything “Apple.” Sales continue to be dri-ven by products that worked great and looked better than anythingelse in their product categories. That’s a branding phenomenonnot seen since IBM launched their famous logo and computerproducts in the 1950s.

Your brand’s success depends on the merger of twoprimary dynamics: visual and behavioral branding.

If perception really is the reality, your brand will have to bemore than just skin deep. The old saying, “You can’t judge a bookby its cover,” is especially true in branding a company. In this firstdiscussion, visual branding, we’ll review how the cover of that bookmust compell a customer to pick it up. In the second part of thisdiscussion, behavioral branding, it’s about how your customers seeyou on the inside: how you connect with the customer; customerservice; a desire to understand their problems; and, personnelmanagement.

As the economy struggles to get back on its feet, most businessowners are looking for ways to cut some costs. Payroll is the biggest

expense for any company so reducing employee hours or, in theextreme, letting people go, may seem an obvious if painful deci-sion. Another method for reducing costs has been reducing mar-keting expenses. The former can be an emotional juggernaut,while the latter can negatively affect your market share. If youreduce your visibility with the target audience, especially if yourcompetitors continue, or increase, their exposure to a shared mar-ketplace, you will run the risk of coming in last place. Lose marketshare to your competitors and survival is questionable at best.More on advertising later in this story.

For new entrepreneurs with a new “earth-shaking” service orproduct, the energy and passion that created that big idea may alsocreate an illusion, “They will beat a path to our door!” Well, you'llneed to pave and light that path if want your audience to find you.And the message must be delivered in an informative and verycompelling manner. That “message” is going to be your “visualbrand.”

Marketing Communications: your visual brandGenerally speaking, the starting point of brand development

would be your visual identity, the visual foundation of your brandonce you have the product or service ready to “hit the streets,” asit were. The logo doesn’t always have to illustrate what you do. Butit must set a visual baseline for credibility and be memorable. TheIBM logo designed by Paul Rand in the 1950s, turnedInternational Business Machines into a marketing paradigm for thecentury. From the logo to product brochures, packaging design,and television advertising, the quality of the message has convinc-ingly told the world, “we have the best products and people tosolve your technology problems.” Their message has always beencompelling regardless of the new products being announced. Tothis day, IBM’s brand remains recognized world-wide as a symbolfor product innovation, quality and customer service. And they’vedone it by maintaining a clear and compelling message regardlessof media selection. The company has also been a model of pro-duction values. Along with great visual and writing concepts, thequality of execution of their concepts has never wavered.

Does a logo matter? Yes, up to a point. Before deciding on an iconic logo for your

company’s identity, the name of the company is also a key dynam-ic in this choice. If, like the IBM model, your company has a longname, creating a memorable icon could make your identity easierto remember. Or, if the name of the company is quite short andeasy to remember, you can convert the name into a designed“logotype.” The familiar XEROX logo designed in the early 1960sby the world-famous New York-based design firm, Chermayeff &Geismar is a classic example of this. Apple Computer shortened itsname to Apple, Inc. after the wildly successful iPod and iPhonebrought in customers to their Apple Stores which then drove salesfor their popular, easy-to-use Macintosh computers. The Apple


symbol is now as recognizable as the IBM logo. Whatever directionis right for you, the development of your logo and identity is notchild’s play. Just because it can be done on a computer instead ofwith pen and ink, “Don’t try this at home.”

Top designers have a gift for what I call, “intellectual osmosis.”That is to say, rather than relying solely on artistic talent, they alsohave a craving, either academically or through life experiences, forthe study of economics, sociology, psychology, anthropology andhistory, and then merge all of it into the creative process in order toarrive at a real solution to your real marketing problem.

All too often, however, a graphic designer with little practicalexperience will blithely create a logo that may look great on theircomputer monitor and stir their soul. But without the intellectualfoundations, it has a real chance of failing as a marketing tool. Also,logos designed with lots of color and complex, fragile linework mayapply to the web because you can use as many colors as you want inthat RGB (red, green and blue) world. But they can cause expensiveproblems when putting ink on paper.

As with IBM and Apple, it’s also about how you apply that newlogo to everything that will have your name on it, including businesscards, stationery system, working papers (invoices, purchase orders,change orders, fax sheets), packaging, vehicle and building signage,and advertising. And it must be understood that, the success ofthose marketing communications efforts was based on design with astrong foundation of marketing principles, as well as understandingthe psychology of your intended customer base, and your competi-tors.

There is no question that your budget will play a role in select-ing a graphic designer or firm to develop your graphic identity.Owing to the pressures of the economy, there are lots of talentedand highly experienced, freelance designers “out there” willing tonegotiate pricing to get your business. But be willing to pay a fairprice for top quality work. Resentment on either side of the deal willprove unproductive and wasteful of time and money.

Here is another tip: do some research on what makes a suc-cessful identity and brand by going to the larger bookstores whereyou will find design trade magazines such as Communication Arts,Print or Graphis, as well as advertising and design annuals exhibit-ing the best-of-the-best. It will open your eyes to how thoughtfulmarketing communications design can work for you.

When and where to advertise

Now that you have your company identitywrapped up, you'll need to “light thepath to your door” so potential cus-tomers will feel the desire to contactyou. Though websites are undeniablyimportant for nearly any business, printadvertising remains an important mar-keting communications tool. Yes, adver-

tising is a commitment of resources, to be sure. But reducing oreliminating your exposure to the target audience will likely sendthem to your competitors. Remember: a well-focused, concept-dri-ven ad campaign can “separate your company from the herd” toincrease your market share.


Have you noticed the continuous use ofthe word, “campaign?” Running one ad onetime is simply here-today-and-gone-tomor-row. Out of sight, out of mind. An effectiveadvertising plan requires a series of well-coordinated ads that speak with one voice,much like a series of important ideas strungtogether into a cohesive and memorablestory.

Since the tech meltdown of 2001, theweb has rapidly regained its strength as apopular source of information and transac-tional communications. Since there aren’tany television stations headquartered in LaPlata County, print advertising remains avery cost-efficient media choice. Whichprint media will depend on the industryyou’re in, your target audience, and, of course, your budget.

Successful advertising in all of its iterations, such as print, web,radio and television, is driven by The Big Idea, media selectionand frequency. From there, it’s in the presentation. The great con-cepts involve great writing and visual ideas executed in harmony.So, should you go to print advertising or work from the web? Thiswill be dictated by a number of factors including your budget andthe current state of your marketplace but more than likely, yourtarget audience. Are the web-centric or more comfortable withmore traditional media such as print.?

Behavioral Branding: When it comesto interacting with new or existingcustomers, you must be perceived as“interested” and not trying to be“interesting.”

Along with a great visual impression,there is the time-honored concept of cus-tomer service. We all know what it feels liketo feel like someone’s commission. Thesalesperson is trying to appear very interest-ing (“Dig me!”) without appearing to beinterested in you, your problem or yourneeds for a solution to it. Hence, to createthe perception that you are focused on cus-tomer service, you must be “interested,” andnot “interesting.”

Without that, a great logo and advertis-ing campaign will count for precious little. In fact, lousy customerservice will sink a company faster than marginal marketing com-munications. As Tom Peters, the business consultant and authorof “In Search of Excellence” and “Thriving on Chaos” wrote onthe subject of management, “Never over-promise or under-deliv-er.” (It should be noted that these books were written when someonce-high-flying companies seemed bulletproof. Today, some ofthose companies are in serious trouble because they rested ontheir laurels rather than maintaining the pursuit of product innova-tion, quality and customer service. As the economic paradigms

If you don’tbrand your

company, yourcompetition

will be only toohappy to do it

for you.


shifted in uncertain times, they lost significant market share.)Regardless of whether you are selling widgets or financial ser-

vices, it’s all about “service.” Top sales representatives will tell you,you are not really selling goods or services. You are selling “you.”If you can sell yourself, you can sell just about anything.

Perception is reality

Let’s say you own a small-to-midsize business.Maybe you’re in retail sales with a store-front, or you’re a consultant with an

office. Do you make it easy todo business with your company? Whatdoes your store or office say about you? Areyour merchandise displays in order withcompelling signage to lure the customer to

the cash register? Does your office look like a chaotic warehouseor an organized and efficient work environment? Is everyonedressed for business? When a customer walks in, is there some-one to welcome him? If a customer feels ignored upon enteringyour store or office, it won’t take long for him to seek out one ofyour competitors. When shipping locally or beyond, are yourdeliveries made on time? Did the invoice reflect the original quoteor were there hidden surprises? Did the products or services liveup to expectations? These may sound like operations-orientedquestions, but they are also going to affect your brand identity.

The intangibles of behavioral branding

Branding even goes as far as employee and man-agement behavior. At one time or another, wehave all been in a store or office where, in plainsight and within earshot, a couple of employeesare nattering on about a customer, fellowemployee, or the boss. This will short-circuit

your brand very quickly with the customer. We have also seen abusiness owner or manager disciplining an employee in front offellow employees or a customer. This is another blade betweenthe ribs of your brand. It tells your customer, as well as the otheremployees, that you are willing to ridicule and humiliate someone,anyone, in front of their peers, just to make a point or to ventsome anger. Assume they will do that to you, as well. This is anoth-er example of tearing down your brand brick by brick. Actually,you can knock down the entire wall in one fell swoop.

Communications as behavioral brandingThere is a currently perceived lost art of communicating per-

son-to-person, either in person, on the phone, or by email. Blamehas been splashed around with some focus on the anti-social steril-ity of the internet. Others blame “the video gaming generation.”One of the characters in Carrie Fisher’s classic tome, “PostcardsFrom the Edge,” declared, “I have no time for instant gratifica-tion.” Perhaps that belief has infiltrated society as a whole. Maybenot. Yet, that statement does seem a bit prophetic.

The fact remains, there is more to communications than


installing a phone system and carrying a BlackBerry with you.When an existing or potential new customer calls, or emails, beresponsive. Let that customer know you care about them and theirneeds. If the phone rings, pick it up by the third ring. The patienceof your customer can wear thin when they have to wait and wait forsomeone to pick up the phone. (There’s that, “no time for instantgratification” problem.) If you have “call waiting” on your landlineor cell phone, avoid the temptation to cut off your current conver-sation to take another unless it’s really an emergency. If the callerfeels like the proverbial “chopped liver” because you put them onhold to take another call, you probably lost that customer for life.

Then, believe it or not, the ubiquitous, automated “reception-ist” that a potential new customer hears before talking with you, stillfrustrates most people. In larger companies or governmentaloffices with such a system, a common complaint has been the dig-ital, circular “death march” of selections, not to mention the music-on-a-loop. “Press 1 for a map to the restrooms; press 2 in the eventwe may care about you,” and so on. Ask nearly anyone you knowabout their reaction when their first-time call to a company result-ed in a live person picking up their call. Though we are becomingmore and more accustomed to the world of digital automation, it’sa pleasant surprise to most people, and another element in thedrive for repeat business. Despite rumors to the contrary, courtesyis not out of fashion and it will go a long way to fortify your brand.

Remember: your phone will take a message from the othercaller. Be courteous and the dividends in public relations value willbe enormous.

You are your brand. If you appear inattentive or discourteous,word of mouth will drive a stake into the heart of your brand andyour company. If they have to leave a message, check your mes-sages frequently so you don't keep customers waiting. The appear-ance of not being responsive is a big brand killer.

Branding does work!

Recently, while researching a story for the upcom-ing fall edition of Durango Living, I talked to DoeYoutz, owner of Durango-based Little ParadiseLandscaping, about her business model. Sinceher company seems perpetually busy thoughout the year, I asked how she manages to stay so

busy, especially with prestigious projects. “It’s the little things, suchas, listening to the client and promptly returning phone calls. Itseems simple but, you’d be surprised how many business peopleforget who’s paying their invoices.” Customer service wins again.

Remember, creating your company’s brand may take time, butdestroying your brand can happen overnight.

Branding is not an option. It will happen with or without yourefforts. It is the reality of doing business. Follow these simple ruleson branding and you’ll find yourself weathering nearly any eco-nomic rollercoaster better than your competition. It is not abouthow YOU perceive your brand. It’s all about how your TARGETAUDIENCE perceives your brand.


La Plata County is primarily a service-based economy.With home building the exception to the rule, there is little

manufacturing. Across the nation, these are hard times, arguably the worst since the Great Depression. Effects vary across America and the world, as well as La Plata County. While the causes for this

downturn are being reported, discussed and argued amongst a broad spectrum of economists, business leaders, journalists,

entrepreneurs, politicians and talk show gasbags, this is no time for wait-and-see. The clock is ticking.

ECONOMICREPORT

NOWWHAT?


To get a sense of how our local business-es and civic leaders are interpreting thefluctuations of the economy, we conduct-ed several interviews in an effort to notonly check the regional pulse, but also lis-ten to the forecasts and strategies neededin the recovery process. Not surprisingly,businesses tied to real estate, new homeconstruction and auto sales were takingthe brunt of it while most retailers wespoke with throughout La Plata Countyindicated they were not feeling as much ofa hit as originally expected. In mostinstances, retailers were not revealing any“secrets of the reef” until the tourist sea-son comes to a close. Meanwhile, thoughdaily sales figures are sporadic at best,end-of-month tallies are telling a bettertale of the sales tape, contradicting newsthat collected sales taxes are running atlower levels compared to last year, wemay very well have to wait till the seasoncomes to a close before assessingprofit/loss analyses. Here then, is a reviewof business trends, strategies for survival,and forecasts to help you and your busi-ness navigate through this recession.

The news on a national level

continues to be mostly bad

depending on where you live or

whose ox is being gored. Since

the Dow Jones Industrial Average

hit a low of 6,776.44 back on

March 6, 2009, it has returned

to the mid-8,000 range fluctuating

up and down from there. What

has been the cause?

Wall Street investors are looking

for any signs that better times are

just around the corner. Plus, some

Blue Chip stocks are great bar-

gains right now.

Still, unemployment claims

continue to set off alarms for

most economists. For instance, the

monthly figures for new unemploy-

ment claims are somewhat lower

than the past two months. But, in

recent interviews with, and essays

from, Princeton economics profes-

sor and Nobel winner, Paul

Krugman, the lower numbers for

unemployment claims actually

mean that the economy is still get-

ting worse, but doing so at a

slightly slower pace.


Durango

Durango’s tourists are back in town and, if con-verations with local retailers are any indica-tion, sales are either up or, at least, holdingtheir own. The words of Deb and MikeGibson, owners of Appaloosa TradingCompany, may accurately describe just how

local retailers are faring: “Staying even is the new up.” By contrast, construction and sales of homes has fallen dra-

matically as shrinking investment and retirement portfolios haveforced many families to reconsider purchasing or building a sec-ond home, or at least scaling back on the project. This has also

affected the construction-related trades, sales of construction mate-rials, and the sales of home furnishings and accessories for thosesecond homes.

On the plus side, remodeling and landscaping for existinghomes has meant an uptick in residential refinancing at local bankswhile providing some needed relief for those contractors who’vefelt the sharp downturn. The recession also has homeowners whomight have traded up for a larger home, deciding to stay put andinvest in their current abode. Will they want to sell their newlyremodeled homes or decide that the new kitchen and newly land-scaped property truly equates to “home sweet home.”

Speaking with Durango City Planner, Greg Koch, new regula-tions responding to quality-of-life relative to the pace of develop-ment, are under consideration city councilors. And with the price

A caveat on what we “learned” while researching for this article: despite some gloomy news, our sampling of a variety of businesses in LaPlata County frequently resulted in rather upbeat reports, or at least less fearful than we presumed would be the case.

Along with the shop-local campaign’s effectiveness with locals, reports of more walk-in customer traffic for local retailers seems to con-firm modest increases in air passenger statistics from the Durango-La Plata County Airport. The numbers at the end of the summer touristseason will tell us how visitors and locals were spending their discretionary income on goods, travel and lodging.

In the course of researching for this article, we cannot presume to know what is truth, denial, or simply a need to keep the cards closeto the chest. There are businesses who have dodged the recession bullet while others took a direct hit broadsides. Nevertheless, despitethe collective pain endured by so many business owners and their employees in real estate, construction and auto sales, La Plata Countyhas not been hit as hard as other regions in the state or the nation.

Nevertheless, personal perspective has brought back an old mantra which hs been playing out across the country and getting a lot ofplay around the internet: “If you lose your job, it’s a recession. If I lose my job, it’s a depression.”


of commercial and residential real estate sitting at “bargain” pricesfor those who have cash, realtors see this as a great time of oppor-tunity for those who can invest in property.

Koch also noted that as of this writing, a revised land use anddevelopment code is being generated resulting in rules that are“simpler and easier to understand while being more predictable,more efficient and fundamentally “friendly.” He also noted thatin recent studies looking at public attitudes on development, 30percent were pro-development, 30 percent were anti-developmentwhile the other 40 percent said they were for development but withlimitiations.

Here then, is an overview of how some of our entrepreneursare dealing with the current economy and what, if any, plans theyhave to come through it all the better for it. We couldn’t get toeveryone in every business sector but, those that were intervieweddid give us “fairly reliable” feedback.

The Real Estate Market: Coldwell Banker Heritage House Realtors

In a March 23 interview with Gina Picolli, co-owner ofDurango-based Coldwell Banker Heritage HouseRealtors, and recently appointed to the Colorado StateBoard of Realtors, we got her unvarnished opinion ofwhere the real estate industry in Durango is, and what thenear future holds.

Unlike La Plata County, the large-market players in develop-ment and lending could be “here today and gone tomorrow,” leav-ing their customers, feeling more like victims, to fret about keepingtheir homes, as well as their jobs. Was predatory lending a prob-lem in our region?

According to Piccoli, lenders in this smaller market may beyour neighbors, their kids may go to the same schools, or belongto the same sports teams as your kids. Safe to say, this is not a placeto make enemies as a predatory lender.

When were the first signs that real estate sales were slowingdown and just how dramatic was it?

“We peaked in 2006 with 2007 showing the first declines inclosings. Right now, with the slowdown, we have also seen about a10% loss in agents. When the market is hot, there are more agentsand brokers wanting to be part of that success. When the marketcools down, some agents drop out while we keep the better pro-ducers for the long haul.”

To compare the Durango real estate market with the rest ofthe country, there are several dynamics putting more downwardpressure on other regions while ours is feeling less of that pressure.Why is that? Piccoli noted, “With a population of about 50,000people, we are not dealing with the sales and listings pressure ofmarkets with millions of inhabitants, not to mention residentialdevelopments creating thousands of homes per project. We alsohave a more balanced economy than, say, California, Nevada andFlorida.” Balance may be relative since La Plata County is not amanufacturing center.

Piccoli’s forecast for 2009: little chance of recovery before2010. At best, 2009 will either hold steady or decline another 20%by the end of the year.

32043253


Commercial Development: Prudential Triple S

Prudential’s Scott Kurlander and Larry Gardnershared similar concerns about too much producton the market with too few buyers. Indeed, 2005-06 were good years for commercial development inthe Durango area. Vacancies for commercial spaceis filling more quickly in downtown Durango pay-

ing off the old axiom about the three most important rules of realestate: location, location and location. The further out from down-town Durango, the slower it gets.

In the meantime, Kurlander and Gardner feel that commer-cial developers are being hampered by Durango’s planning depart-ment. Is it an issue of just how much traffic can be absorbed, andis there going to be a demand for more retail, light manufacturingor lodging? One could argue that increased traffic reflects a greaterneed for those new businesses. If the traffic flow remains stagnant,does that reflect a general disinterest by the public for more shopsand other commercial enterprises? Perhaps aforementioned, new-and-improved land use and development code mentioned by GregKoch will relieve some of the worries expressed by Kurlander andGardner.

In the “making lemonade from lemons” department, this isalso a time of opportunity for commercial developers seeking tobuild for the warehouse, manufacturing, retail and lodging indus-tries. Just add money.

However, according to Art Chase, CEO of The Bank of theSan Juans, the near-zero demand for commercial loans would sug-gest the recession has yet to bottom out. In fact, Chase suggests itwill be two or more years before he sees an increase in loans fornew construction, residential or commercial. Refinancing of exist-ing residential loans is the more frequent loan activity for now.

As for the planning department’s role in opening the oppor-tunities for commercial development, Koch reports that it is theeconomy that has held up commercial development, not hisdepartment. And that coincides with Chase’s comments on loanactivity. And according to Koch, whatever clamour is erupting oncommercial development it’s coming from the real estate brokers,not the developers. Ultimately, Koch contends, quality of life forDurango’s citizens is the top priority for the city’s planning depart-ment and the governing bodies.

Koch did note that, while compromise is important in resolv-ing the more difficult issues of land development, his departmentwill not compromise that “quality of life” Durango’s citizens areresolute to defend.

The Homebuilding Industry:Building Specialties Store Owner, Steve Osborne

Real estate and land sales continue their role as an economicbarometer affecting tangential businesses. The list includes home-builders, building material suppliers, architects, landscape design-ers, and a host of contractors in surveying, framing, roofing, stone-masonry, excavation, forest clearing and construction equipmentsales and rentals. The homebuilding industry is reframing its busi-

ness paradigm for the long run. And the operative words are,“greener and smaller.” In the category of supplying building mate-rials, we spoke with Steve Osborne, owner of the BuildingSpecialties Store in Durango.

Osborne successfully weathered the recession of the late1980s learning a lot from the experience. And while he has had tomake some painful adjustments to his business in this recession, heis a redoubtable and nimble business optimist with a paradigm thatallows him stay ahead of the curve; to not only make it through therecession, but to be stronger for it.

With their premium product lines and customer service,Osborne has created a loyal following which has helped to mini-mize the recession’s effects on his business. Also, Osborne had to

make a few painfuladjustments owing tothe protracted slow-down. But he’s alsobuilt a rather egalitarianoperation resulting insome shared sacrificethroughout all levels ofthe company.

So how has thedownturn affectedBuilding Specialties?“For the calendar yearending 2008,” Osbornesaid, “we experienced adrop from 2007. I wasprojecting an additionalreduction in businessby the end of 2009.

However, now I think we may have a better year than expected.”Where does he get the positive energy for his forecast?

“As a major participant at the 2009 Home & Ranch Show, Inoticed some very interesting indicators,” he said. “There was pos-itive feedback from other exhibitors. Plus, despite lower atten-dance figures at this year’s show, (apparently owing to particularlyharsh weather conditions that weekend as well as the state of theeconomy), I saw more actual interest shown by those who bravedthe storms to see what was on display. This was a good sign.”

Along with the slump in real estate sales, the busi-ness of building custom homes has been chang-ing rapidly with the faltering economy hasforced home builders to feeling the pinch, too.To get a sense of what is happening in this busi-ness sector, we went to a couple of custom

home builders: Mark Galbraith, owner of Galbraith Builders, andTroy Dyer, vice president of DyerBilt Construction. Their com-ments on advancing the cause for green build technology and inno-vations have been a recurring theme in conversations with othercustom builders. In past conversations with custom builders Greg

Steve Osborne, owner of the Building Specialties Store in Durango Photo: Andy’s Photography

Mantell-Hecathorne, Alix Kogan and Russ Turpin, there was acommon theme for sustained success and growhth in the future.Everyone is going green.

Mark Galbraith, Owner, Galbraith BuildersAs the son of a well-known architect in Pasadena, California,

Mark Galbraith was raised on architecture, art and design from anearly age.

Arriving in Durango in 1990, Galbraith quickly became oneof the town’s first custom builders of large luxury homes, influ-encing other custom builders who set up shop as the real estateboom began to ramp up. His home designs are uniquely contem-porary though not radically so.

Over the past few years, like many custom home builders,Galbraith has seen some projects cancelled or put on hold asclients’ investment and retirement portfolios gave them pause.However, he’s taken matters into his own hands by studying thelatest in green technologies and innovations, thus achievingEnergyStar certification and LEED (The Leadership in Energyand Environmental Design Green Building Rating System™) cer-tification at the Platinum level. At this point, there seems to be apronounced turnaround in his business.

One project that had been on-hold is not only back on track,it will be a flagship home for maximizing the use of green tech-nology, including a patio roof made of a new “bi-facial” photo-voltaic solar panel. The PV film is so thin that, while capturing thesun’s energy with the topside cells, those same solar rays pass

through to reflect off the light-colored deck flooring. That reflect-ed sunlight is then captured and used by the PV film on theunderside.

So what is Galbraith’s business plan for this recession andbeyond? His basic business paradigm for success has remainedresolute from Day One: design excellence with faultless execu-tion, and a passion for customer service. With Galbraith’s ever-expanding expertise in Green Build technology, and dedication toexcellence, he believes he’s firmly in control of his company’sdestiny.

Troy Dyer, VP, DyerBuilt ConstructionTroy Dyer, the vice president and son of company founder

Terry Dyer, and Frank Enea, the project manager and head ofestimating, echoed Galbraith’s strategy and outlook. “We’re see-ing trends heading toward smaller homes built with the sameattention to detail and green technology.” said Dyer. “This hasbecome a “second” market for us. Smaller and greener but withthe upgrades seen in the larger luxury homes.”

“We have also been attending all of the green technologytrade shows. While there, we spend less time “shopping” andmore time in the seminars and other classroom opportunities tolearn as much as possible. It’s a non-stop education process. Thisis the future and we’re dedicated to keeping ahead of the curve.”

“How do you convince clients who may not be initiated intothe green build ethic? Do they resist the cost of it?” I asked.

“We advise those clients that, while including green technol-


ogy may add to the cost of building or remodeling a home, theindustry tea leaves tell us that a home built without green tech-nology will be a tough sell in the real estate market. Future home-buyers will demand and/or expect green technology when theyare hunting for a new or existing home. When the homeowneris still a bit iffy about it, we suggest that they at least “rough it in”so that, when they do decide to jump into green technology, theirhome will be ready for that retrofit situation. Plans to adjust theirmarketing strategy are in the works.

“Our web site will be going through a complete makeoverthis summer to reflect the new dynamics of DyerBilt. We’llinclude a blog link on that site so that we can keep our audienceinformed on a daily basis.

“For instance, compared to a year or so ago, referrals andnew contacts coming from the internet and our web site haveseen a sizable increase to about 85%, and it seems to be a trendin most sectors of the custom building and real estate communi-ty. It seems most everyone is taking the electronic route to ourdoor. That says a lot about how we communicate our messageand how we position our company for the future.”

Banking and CreditBank of the San Juans

Back on April 22 of this year, The DurangoHerald’s Patrick Armijo met with some of ourlocal bankers on how they are dealing with thisdifficult economy. There were concerns aboutWall Street’s reputation as an unregulated casi-no at the hands of several investment “banks,”

some of which have collapsed and been absorbed by some of thenation’s largest banks, which affected local perceptions of banks.In fact, the Wall Street debacle is putting banks across the coun-try, including our local institutions, in a marketing bind as theywork to separate themselves from the investment banks, whichare not really banks nor are they part of the well-regulated bank-ing system.

It has been nearly three months since that report, and in thiseconomy, some things have changed while others have not.

On July 2, we went back to Art Chase, CEO of Bank of theJuans to get an update on the current economy and local bank-ing. For Durango, Chase sees the current economic climate asthe worst severe downturn since the mid-to-late 1980s.

Is there any commercial loan activity for current businessexpansion or new commercial development? Chase replied,“No and appropriately so. Uncertainty in the economy does notbreed the confidence to expand or develop new businesses,especially on the larger scale.”

“From the viewpoint of a local bank,” Chase noted, “com-munity banks operate under very tight regulations.” Banks suchas his were not involved in the high-risk activity that have calledup so much negative attention to the larger banks. Those such asBank of America, Citigroup, and JPMorganChase had createdtheir own investment arms that played fast and loose in thosehigh-risk markets. Whereas, a community-run bank loans

money based upon local deposits. With real estate loan rates remaining the lowest in recent

memory, Chase sees a comeback for “jumbo” loans ($417k+) asthose interest rates are taking a slow return back from the highsof 9% back to about 5.875%. That will help to sell the higher-end inventory. Thus, homes in the $300-450k range have beenthe dominant selling range while sales for more expensive homesremained stagnant.

Is job security giving homeowners pause about buying up? “There is a psychological aspect of home sales. For those whofeel their jobs are pretty safe, there is a tendency to make thoseloans for either upgrading current homes or buying up. With theshortage of buyers. it’s hard to buy up if your home won’t sell.”

When asked for an analysis and prediction of when therecession would come to an end, Chase said, “I’m not sure, real-ly. No one really knows. I think we’re in the middle of the stormfor now. But without the extreme boom and bust cycles seen inlarger markets, our downturn is not as hard-felt. Also, our unem-ployment rate is around 5.7% so, compared with the nationalaverage (that continues to rise past 9.5%), our local retailers andother small businesses seem to holding their own.”

Back in April, Chase said his bank’s loans were up 20 per-cent compared with that point in 2008. Refinancing of mortgagesis the major driver of loans currently, and Chase said fixed-rate,30-year mortgages below 5 percent are as low as he can remem-ber.

Auto SalesNote: We’ve heard about the subprime lending in home saleswhere buyers were urged to extend themselves further to get intomore expensive homes they may not otherwise afford. The sameconcept sub-prime system was also used by some auto dealers topush buyers into more expensive cars and SUVs where profitmargins are much higher than smaller less expensive vehicles.During the real estate boom, too many buyers frequently lever-aged their perceived home equity to buy the luxury dreammahine they would not otherwise have purchased.

Monty Roder, owner of Economy Nissan,is more than a survivor. Maybe hisupbringing in New York City preparedhim as such. New Yorkers are, generallyspeaking, not easily intimidated. Theyface the situation and find solutions,

rather than run for shelter. And if you are going to be an entre-preneur, Roder believes you can’t stop innovating if you want tomake it through the tough times. Before 1973, Roder was plan-ning on an altogether different career path. It’s been a long andconvoluted journey to Durango.

When asked about the upheaval in the auto industry withthe bankruptcy filings of Chrysler and General Motors, franchis-es being lost and the possibility of being one of the few car deal-ers left standing in the area, Roder was philosophical, pragmaticand a bit sympathetic about the threats to his competitors.



“It’s not that Jim (Morehart), Pat (Murphy) and I spendhappy hours together after work, but I’m pulling for them tomake it, and New Country, too. When all of us are healthy, it’sbetter for the entire industry and our community.” said Roder.It’s his belief that any failures among the other major brand deal-ers could create a mistaken belief among consumers that all of thedealerships may be in a shambles.

So what is Roder doing to keep the doors open? Customerservice for one. “A large part of the brand image for EconomyNissan,” Roder noted, “is that customer service is just as impor-tant as the brand on the showroom floor. When you are in a busi-

ness where you are accountablefor sales every hour of every day,extraordinary risks must be com-pensated with great customer ser-vice. In an industry where brandloyalty is magnified, getting some-one to switch brands is a big deal.Keeping their loyalty will nearlyalways result in repeat business.”As with most businesses, moremoney is made from repeat busi-ness and referrals than from creat-ing new business from scratch.And in a business so tightly relat-ed to the credit industry, you bet-ter have a great reputation for cus-tomer service.

Nissan is only one of severalbrands of cars Roder has repre-sented in his career. So he decid-ed long ago that the biggest brandto protect is that of himself and histeam. Roder continued, “Buildcustomer relationships or you’relikely to be standing on thin iceduring a recession.”

However, over the past sev-eral years, car financing has takenon new dynamics as buyers caneasily end up upside down after afew years with their car loan.“There was a time,” Roder said,“when you financed a car for 36months. Then it began to expandto 48, 60 and now even 72months.” Some dealers even offer84 months but that means you’llbe upside-down on your car’sequity long before the final pay-ment.

With the current credit cri-sis, new car financing is gettingmore difficult. Fortunately for

dealers including Roder, the used car market has become a newcash-cow making it easier to keep doors open while new car salesremain in a slump.

Though new car sales are down everywhere, Roder remainsupbeat. “The sun keeps coming up every day, we treat our cus-tomers with dignity and respect, and hope they walk in planningto buy.” He added, “The key to surviving this recession and thecredit crisis, is to keep the attitude of always doing the right thingfor the customer.”

Monty Roder, owner of Economy Nissan and life-longNY Yankees fan. Photo: David Ohman

New Country Auto CenterGeneral manager Geno

Trujillo may be sitting in the catbird seat when the recession wanesand buyers for new cars begin theireventual migration into dealershowrooms. Why? With Italy’sFiat buying Chrysler Corporation,and GM quickly gliding through itsrecent bankruptcy filing in anattemp to reinvent itself, Detroit’sBig Three is, for all practical pur-poses, down to The Big One:Ford.

Currently, new-car buyersremain skittish over cash flow andjob security so the trend is towardused cars for now. In fact, as withEconomy Nissan, used car saleshave been plumping up the bal-ance sheet and New Country is noexception with into positive gainsfor the last three successivemonths.

Then, there are all of the ravereviews from automotive journal-ists and the various customer satis-faction surveys about Ford’snewest lineup, it appears Ford hasbeen anticipating the changes incustomer desires for a few yearsnow and that should translate intoa sales resurgence for NewCountry Auto Center.

Trujillo also expects that, withtheir emphasis on customer ser-vice, especially in used car sales,they will build new customer loyal-ty. That, in turn, should translateinto new car sales for NewCountry Auto Center when cus-tomer come back to to trade inthat used car for a new one.

Retail Reflections

Sales for the retail business in our region are drivenby local loyalties and tourism. However, while salesare down for some retailers, the numbers are up forothers. In fact, the impact here is not as deep as inother parts of the country in large measure owing tofiercely loyal shoppers who support local business-

es and local pride. In Small Town U.S.A., shoppers and shopowners, more often than not, tend to know each other outside ofthe transaction arena. Thus, one hand washes the other.

In Downtown Durango, for instance, merchants are knownfor referrals to each other’s businesses. It’s part of the “ShopLocal” campaign as well as a natural community spirit. Localpride and loyalty is just as prevalent in the La Plata County townsof Bayfield and Ignacio.

Appaloosa Trading Company: The Appaloosa Trading Company is known for leather

goods and clothing with a decided tilt to the Old West. Accordingto owners Michael and Deb Gibson, this downtown location isprofoundly popular. Their Hermosa store also features home fur-nishings keeping with that Old West theme.


Geno Trujillo is the general manager of New CountryAuto Center. Photo: David Ohman


The company has been in operation for 27 years witheight years at the Hermosa location.

For a time, wholesale distribution was a strong point in thecompany’s business model, including international sales inJapan and Europe. However, since wholesale inherentlyinvolves smaller margins, the Gibsons decided to reduce theirwholesale market to regain the margins on their own retailsales. It has been a sound decision, one of many course cor-rections to maintain a successful track record.

One of the difficulties in meeting customer demand hasbeen an unusually severe shortage of leather-lovin’ local arti-sans. The Gibsons are strong believers in hiring local talent.However, this labor shortage put unfortunate pressure on theirfocus to make everything locally. So the Gibsons made a majordecision: They found a number of leather artisans inGuadalajara, Mexico who share their passion. To maintain theGibson’s concerns for quality of material, Mike has a sourcefor American leather and ships it to the Mexican plant. Then,he makes occasional trips to oversee design and quality con-trol. Though there is still a lot of merchandise made at theshops in Durango, the Mexican facility is an important elementin maintaining the margins needed in a competitive marketwithout sacrificing any quality.

One of the Gibsons’ secrets for success has been the selec-tion of their retail locations. For instance, along with theDurango locations, they have two stores in Telluride, includingthe old bank building which also happens to be the site ofButch Cassidy’s very first bank robbery.

Yet, like most retail operations in the region, sales haveexperienced a bump in the road. Nevertheless, the Gibsonsare not sitting idly by. They believe that change is part of lifeso they’ve never stop evolving. Mike may have summed it upbest for this economy: “Staying even, is the new up.”

Backcountry ExperienceBecky and Ben Rockis, the sister and brother owners who

bought the company about three years ago, have yet to have atough year of it. In 2007, their first year of business, theyexceeded expectations. Revenue was almost as good in 2008,and 2009 is trending toward a “fairly good” year overall. Sowhat is propping up their 2009 in this recession?

Most retail development consultants would agree that theirlocation is not conducive to customer traffic. There are nosidewalks for strolling shoppers, while auto traffic tends tospeed by, unlike a location on, say, Main Avenue or EastSecond Avenue. Even the entrance and parking area face westrather than the fairly non-descript intersection of the 550 at12th Street.

Nevertheless, their store does stand out with a distinctivelook all its own, including an exterior sheathed in a rather sub-tle corrugated metal and a very large image of a black crow onthe wall facing the 550. The quaint and quiet look of an over-sized line shack belies the high-end product selections and thewarm greetings that await at the front door. Though tourists

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are certainly welcome, their marketing focushas always targeted the local buyers looking toenjoy the outdoors by the hour, day, week orlonger.

But how could such a large store man-age to sell enough goods without dependingon tourism? One of the new dynamics in thisyear’s success has been the sale of large tentsand lots of camping gear to families opting outof expensive, far-flung vacations, in favor of aweek in the woods. And this is trending verynicely for Backcountry Experience. In fact,the whole trend toward local vacationing hascreated the moniker, “staycations.”

So how did they achieve all of this localloyalty? Since most of the outdoor specialtystores in the region carry much of the samemerchandise, they believe they have the cus-tomer service that builds repeat business andreferrals. According to Becky, their philoso-phy of, “fitting the solution to the customerrather than fitting the customer to the solu-tion” has been paying off.

Rainbow PrintingDan McCarthy and his wife Absah Musa

came to Durango six years ago after workingin the emerging markets sector of Malaysia'sfinancial hub for several years. A year later,they started their printing company as aninvestment with their chosen target audiencein need of speed and economy. While business has slowed down, they’re

confident that they will be prepared for therecovery by offering a price point that manysmall businesses need, especially in this econ-omy.Along with a two-way working relationship

with Basin Printing (across the street), part oftheir profit structure is based on workingdirectly with the clients which streamlines theproduction controlled profit margins. Hiswife, Dan notes, is the financial managementbrain of the firm with a firm hand on cost effi-ciency. Their end-of-2009 outlook may not be as

rosy as they would like, but it’s not forebodingeither. They are doing well enough in thisrecession to feel confident for a stronger 2010.

Thru the LensFor Thru the Lens photo studio, the old say-

ing, “If it ain’t broke, don’t fix it,” seems towork just fine. While some photographers areadjusting to a reduced need for professional


Becky and Ben Rockis, owners of BackcountryExperience, beneath their signature crow logo.Photo: David Ohman


portraits, this portrait studio on Main Avenue in Durango has yetto slow down with their signature western themes, according toBen Martinez, the store manager.

It’s a relatively affordable way to have a whimsical portrait ofyourself or the family taken in full western attire. They also keepcustomers happy with long summer hours (8 a.m. - 11 p.m.) andrapid turnaround of photo prints, thanks to the digital revolution.For Thru the Lens, their formula for success continues to thrive,even during a recession, which means there are no plans to changetheir business paradigm anytime soon.

Rocky Mountain Chocolate FactoryOne of Durango’s storied institutions has been The Rocky

Mountain Chocolate Factory. I spoke with Howie Dickman, man-ager of the store in downtown Durango. The location provideseasy access to the tourist trade, especially since the store is withinsteps of the train station. Dickman said that sales at his store aredown about 10% from last year (a number that is confirmed in thecompany web site), a pretty modest hit compared to some retailers,especially on the national level. Still, in an economy that has sev-erly battered some companies to the point of closing their doors,The Rocky Mountain Chocolate Factory seems to be weatheringthe storm for growth beyond the recession.

Retail in general ...Stores such as Oohs & Aahs and There’s No Place Like Home,

are reporting reasonable cash flow despite other trends. A rea-

sonable abundance of summer tourist foot traffic is helping to keepsales in healthy territory while “shop-locally” referrals are addingto the sense of hopefullness for a profitable season. A commonrefrain has been, “things could be worse.”

Coffee companies are doing rather well since specialy coffeebeverages are considered affordable indulgences, even when theeconomy is slow.

Arts and Entertainment

When it comes to live entertainment, LaPlata County is swarming with venues,from intimately sized bars and restau-rants hosting very talented local bandsplaying to a loyal following, to TheHenry Strater Theater with fun built

into every show, and of course, the Community Concert Hall.When mid-summer arrives, the Music in the Mountains festival isheld under an expansive white tent at Durango Mountain Resort.I was a volunteer at the festival last summer and I can tell you thatnearly all of the seats were filled for each performance. This hasbeen a very popular music festival indeed.

This year, owing to the recession and the concerns about dis-cretionary vs. disposable income in the country overall, ticket salesat the Concert Hall are down about 20% (as of mid-June). Nearlythe same is holding true for the music festival. However, as sum-mer weather continues its advance, sales should improve for thefestival.


Going to the movies is playing a bigger role in entertainmentduring the recession and, historically, this has held true for near-ly every economic downturn. Case in point: movie-going was amajor source of relaxation during The Great Depressionbecause it was just about the least expensive fun one could have.And Hollywood was breaking out plenty of movies to be seenduring the 1930s. The “talkies” were in full swing creating a rushto the box offices around the country.

This topic converges with home entertainment as technolo-gy creep invades every aspect of our lives. The state of the econ-omy has not been kind to DVD rentals and big ticket purchases,especially for “mom & pop” stores relying on a loyal following.Competition from the likes of Costco, Best Buy, Sam’s Club andWalmart has put a dent in sales at non-big-box stores. Forinstance, local mainstay, Louisa’s Movie House & Electronics,can be seen as a barometer for other independent retailers inthis market segment in terms of slower DVD rentals and homeentertainment sales.

To compete against the big-box operations, customers willoften force smaller retailers into price negations “playing bothends against the middle,” to get the best deal while getting bettercustomer service than they perceive from those retailers head-quartered out of state.

NetFlix was the first to change the video rental businessmodel affecting rentals and sales at the long-established storessuch as Blockbuster. Now, NetFlix is being pressured because of

the technology to download movies from internet sources, suchas Apple’s iTunes, into a home computer connected to a largeflat-panel TV.

The idea of settling into a movie at home while lounging inPJ’s and dining on less expensive popcorn is not going away any-time soon. For families, especially those on a tighter budget, thisis becoming the perfect option; no baby sitting expenses, no dri-ving to a theater, parking problems or those occassionally annoy-ing movie-goers sharing theater space.

Will “going to the movies” grind to a halt? Not likely.Hollywood is creating a lot of films using digital special effectsand computerized animation that are better suited for the bigscreen. This is not about wire-headed nerds taking over themovie industry. Producers are seeing a large, upward incomeswing with these movies. Why? Because many of these digitallyproduced films replicate what is taking place in the video gameindustry and that captures that huge 13-29 age range with dis-posable income ready to swarm the theaters.

Toh-Atin GalleryOwner Jackson Clark has managed to combine the best fea-

tures of a retail establishment, art gallery and natural historymuseum. His gallery may seem like it’s off the beaten path at itsside street location on West 9th Street in Downtown Durango.But the gallery’s reputation for Native American art is widelyregarded. In fact, Clark said they are already having a great year,


One of the many displays of Native American arts atToh-Atin Gallery. Photo: David Ohman

much better than 2008.One of the reasons for their success is, he also travels exten-

sively to major shows to represent the collection while seeking thenew and unusual. The results have expanding their reach and rep-utation while generating a considerable revenue stream throughoutthe year. Thus, Toh-Atin Gallery is not as vulnerable to season fluc-tuations.

The Open Shutter Gallery, devoted entirely to photography, ishaving a better year thanks to their move to Main Avenue from EastSecond Avenue last year.

Hotels, Guest Ranches and B&B’sThe Double Tree Hotel

The Double Tree Hotel at the corner of the 550and College Drive, may not be an architecturalhistoric landmark but it is a landmark by virtue ofits location and ability to cater to large numbersof tourists. Originally built as a Red Lion Hotel,the Double Tree has a history of longevity and

familiarity. Summer is the "killing season" when it comes to revenue based

on tourism. In fact, this is the income season for many businessesso the recession can have an effect on tourist travel habits.

Is the Double Tree an appropriate barometer for the hotel andlodging businesses vying for tourist dollars? Most likely. I met withPeter Marshall, the hotel’s manager for several years. Withoutdivulging any “secrets of the reef,” he indicated that sales are down

from previous years, reflecting the state of the economy. He alsoconfirmed the reports of other hotels and motels, that rooms aregetting booked with much shorter notice than before. So whilelong-range planning becomes a rather dicey proposition for a man-ager or owner, things could be worse. In fact, when reviewing thebalance sheets, the tourists are coming in droves, but their travelagendas have taken on some adjustments including more drivingtrips vs. air travel, shorter stays and tighter dining budgets, especial-ly for traveling families.

Tour groups remain an important source of cash-flow for theDouble Tree. In fact, they have taken to facilitating customer eventsby offering to create event websites and blogs so that the tour direc-tors and participants can communicate with each otherand with the hotel to coordinate the event. Once again, listening tothe customers and creating ways to accommodate their changingneeds is making the difference.

The Strater HotelThe historic Strater Hotel certainly has landmark status in

Durango. Perhaps only the narrow gauge train has been in opera-tion longer. Today, Durango native and owner, Rod Barker, has lit-erally managed the hotel with its signature Diamond Belle restau-rant at the corner, and the Henry Strater Theater next door,through good times and bad.

Over the past three years, Barker noted, 2008 was better than2007 and 2009 is at a good pace so far. Since Durango is a veryevents-centric tourist destination, The Strater has been able to cap-


italize on those events much to its benefit. Nevertheless, reserva-tions were more predictable three years ago when they wereabout 30 days out. Today, reservations are coming in within daysof the customer’s arrival. This indicates that travel planning isreflecting reduced discretionary income for traveling families andcouples.

For the Diamond Belle, Barker noted, customers are trendingtoward lower-priced items such as the gourmet burgers. “It’s allabout the fine art of living well,” says Barker. “If you can’t afforda great prime rib dinner, that’s ok. Enjoy a great burger, instead.”

Barker has always maintained his forward focus to preparefor any changes in the economy and/or consumer needs. Hissuccess is infused with the philosophy that change is good.

Ignacio

The Town of Ignacio, with less than 700 full-time residents, is most often identified with theSouthern Ute Tribe with its Sky Ute Casino,and the oil and gas extraction industry.Though there are plans for growth, it’s moreabout growing the economy than the town's

footprint. The main drag, Goddard Avenue, is sort of like a long,narrow shopping center. The casino at the north end acts as an“anchor” which, as any shopping center developer knows, is nec-essary to attract other businesses and the shoppers who will takeadvantage of a well-planned, attractive commercial district.

For Ignacio, the process of revitalization has already begunto take shape. Under the direction of Town Manager JoseQuintana, and the planning department lead by Patricia Senecaland Sara Wakefield, plans are afoot to capitalize on momentumfrom the new Sky Ute Casino’s tourism.

But while this is a very small town, it has a lot of heart andthe confidence to achieve realistic goals of expanding its econo-my without putting the town at risk of a boom and bust cycle. Toget a clear picture of business concerns, we met with a group ofrepresentatives from the local Chamber of Commerce and theplanning department.

First, we met with Chamber member Ann Mooney, ateacher and co-owner with her husband Stephen of Moon’sCustom Cycles. With their reputation for keeping bikers happy,and some minor tuning, they are able to keep sales moving for-ward despite the current economy. Their customers come fromafar to either purchase a custom motorcycle or to have theirbikes made anew.

Next stop was Roots Natural Foods, a small store feeding alocal demand for locally-grown healthy foods, such as meats,poultry and vegetables. In less than two months the owners, AmyStuck and Jeff Ogden, are in the black with a loyal clientele.

Emily Meisner, owner of The Patio Restaurant, and presidentof the Chamber of Commerce, is excited about the town’s plansfor renewal. Her restaurant has enjoyed feeding local customers,including a large contingent of oil and gas workers for many

Upper left: Ann Mooney in the showroom ofMoon’s Custom Cycles, a shop she and herhusband Steve own in downtown Ignacio. Theircustomer base draws from riders near and far.

Left: Amy Stuck and Jeff Ogden opened theirstore, Roots Natural Foods, mid-May 2009 inIgnacio. With local support for a home-grownstore, their success seems well in hand.

Photos: David Ohman

years. She and her husband have raised five children in Ignacioand are looking forward to helping the town take the necessaryleaps forward to attract more tourists, as well as locals. And thisseems to be the case up and down Goddard.

The Tierra Group, developers of Three Springs near MercyRegional Medical Center, has confidence in Ignacio as a greatplace to raise families who will, in turn, enjoy a revitalized down-town. They’re building a 24-home development on the southedge of downtown Ignacio with two models completed and padsin place for more. “This will take some time but it will be worththe effort,” said Shane Seibel of the Tierra Group.

The Southern Ute Tribe continues to be the largest employerin Ignacio with expansion plans that will mean more jobs and alarger tax base to help fund overall town improvements. AndreaTaylor, Director of the Department for Tribal InformationServices, noted that the various tribal operations will have positiveand lasting effects on the region. As one of the nation’s wealthi-est tribes, theirs is a large group of businesses with enviable stan-dards for cost efficiency and profitability. Total tribal member-ship currently stands at 1,447 with a tribal council lead by sevenrepresentatives. The tribe’s land holdings contain 222,016 acres.Taylor noted that the Southern Ute Tribe is positioned for con-tinued growth and prosperity thus providing a solid foundationfor Ignacio’s future.



Bayfield

The Town of Bayfield sits in the middle ofbeautiful farm and ranch country about 18miles east of Durango. The town is also asouthern gateway to Vallecito Lake to thenorth. Straddling Highway 160East,Bayfield has two distinctly separate and

commercial areas. On the northern edge of Highway160East, you’ll find the newer commercial zone with shop-ping centers and gas stations along the frontage road. In theold town section, historic Mill Street remains a bustling hubwith a mixture of function and charm.

The town is ramping up plans for long-term, sustainablegrowth, according to Town Planner Joe Crain, andManagement Intern Jack McGroder, a young man with abroad scholastic and applied knowledge base about redevel-opment and the inherent dynamics that affect every decisionneeded to make the planning process become reality.

Attracting new businesses to Bayfield while addressingthe needs to improve the infrastructure are front burnerissues for the town council and the Chamber of Commerce.As McGroder noted, new visionary thinking is moving intothe planning process with younger residents and businessowners seeking to institute their brand of future-think.

One of the ways to check the economic pulse of a smalltown is to drop in at a local pawn shop. At Pine River Pawn,located on Highway 160East and owned by Dennis Larson,their business has seen an increase but they cite their newlocation with its greater visibility as a major reason for theuptick. They noted that while pawns are actually down frombefore, the quality of goods being sold or pawned has goneup. This may suggest the pain of a shrinking economy is hit-ting a more affluent clientele than before.

Vallecito Lake

Vallecito Lake and the surrounding area is a

collection of stunning vistas, ranch land andverdant pastures with grazing horses andcattle, steep mountain peaks, and of course,the lake itself. While local lodging and restaurants are

having a good start to the summer, the guest ranch businesshas taken a huge hit.,the exception being Wilderness TrailsRanch just east of Vallecito Lake. Wits End Ranch, an elegantand sprawling ranch at the north end of the lake, is operatingwith the guest cabins only for the 2009 season. They are, how-ever, taking reservations for the 2010 season. Till then, theyare referring all other guests wishing a full ranch experiencethis season to Wilderness Trails Ranch just minutes east ofthe lake.

The view from the front deck of the main lodge atWilderness Trails Ranch. Photo: David Ohman


Wilderness Trails Ranch,

currently the only guest ranch in

the area with a full ranch experi-

ence, is having a good summer

thanks to a revised marketing

strategy to increase summer

bookings. Erika Roberts,

who runs the family business

with her parents, Jan and

Gene Roberts, made important

adjustments to their business

paradigm.


Colorado Trails has also decided to take the summer offbecause of dramatically reduced bookings.

By contrast, Wilderness Trails Ranch is having a rollick-ing good summer thanks to a revised marketing strategy toincrease summer booking. With Erika Roberts at the helm ofthe family business owned by her parents, Jan and GeneRoberts. As bookings for the summer lagged far behindschedule by late winter, the Roberts’s made an importantadjustment to their business paradigm. Incorporating anaggressive networking program with tourism groups, raftingand other outdoor sports organizations, and chambers ofcommerce, they found a sizable market ready to make WTRa summer destination. The B&B reservations represented anew travel segment called “staycations,” referring to localsseeking a few days of fun without the expense of long-rangetravel.

According to Erika Roberts, “We have dramaticallypicked up our bookings. We’re seeing a lot more late reser-vations and folks interested in shorter stays for our new B&Bpackages. For our core summer season, we are around 85%occupancy, and the phone does not stop ringing!” As of mid-June, they had to slow down on the number of B&B book-ings to make room for guests seeking extended stays.

This was another case of a business owner with thevision to make the necessary adjustments when the economydemanded it. To their credit, WTR already had a well-estab-lished brand of their own. Along with dramatic scenery stepsfrom the door of the main lodge, the staff is devoted to cus-tomer service, from the corral and riding trails to the diningroom. As a result, the Roberts’s are able to develop new cus-tomers as repeat business opportunities.

On the west side of the lake, the marinas are thriving.Their continued existence was in doubt when, during thespring, the Forest Service was unsure about renewing theoperating permits for the marinas. However, the marinaoperators were given a reprieve resulting in a collective sighof relief by all of the surrounding business owners. Amongthose who’ve capitalized on the marinas for years, there’s astring of motels, lodges and campsites punctuated by a gen-eral store and restaurant sitting side by side and owned by thesame couple, Char’ and Jim Shank. The Shank House is arustic, restored restaurant and bar and, according to Liz, thebartender, they’re having a great summer. She didn’t seemparticularly surprised by this since their success seems to runyear round thanks to the spirit of a very small but loyal cus-tomer base. To keep the community spirit alive and well, andthe cash register ringing, bands perform 2-3 nights a week.For a community of fewer than 200 full-time residents,Vallecito Lake is humming.


At Vallecito Lake, the marinas

are busy. Their continued exis-

tence was in doubt when, during

the spring, the Forest Service

was unsure about renewing the

operating permits for the

marina operators. A last-minute

reprieve resulted in a collective

sigh of relief by all of the local

business owners.

Photo: David Ohman


Cut to the Chase

It’s no surprise that the real estate sales and new home constructionwith its tangential trades, have taken a drubbing in the past two years.Retirees and second-home buyers were a mainstay for new home con-struction until investments and other retirement plans were hit by theWall Street meltdown. The prognosis for a rebound in that businesssector is sometime in late 2010. Maybe.

Local banks have been seeing an up-tick in residential refinancing loanswhile loans for new residential construction is down to near-zero. Loans forcommercial development are dead in the water.

Will Durango’s new car dealers for American brands survive as dealer net-works are slashed? There are laws to protect dealers, up to a point, at least. But,plummeting new car sales are keeping local dealers on edge what with the tumultin the American auto industry. The fact is, there just isn’t much traction for mostbrands, save for Subaru, the only one to report a profit at the end of 2008 (justover 1.5 percent increase over 2007).

For local dealers selling American brands, there are storms to weather.With plant closings and dealers being dropped, are the clouds breaking up any-time soon to lift sales? The Big Three of Detroit’s automakers are keeping ourdealers guessing.

For instance, though heavily in debt, Ford is attempting to claw its way outof the slump with new lines of cars getting rave reviews from Edmonds.com, J.D.Power Associates, the Insurance Institue for Highway Safety (IIHS), andConsumer Reports, and nearly every automotive journalist in the business. Inthe meantime, GM’s recently successful run through its bankruptcy filing mayallow it to emerge as a newer, leaner, meaner company. Will they produce thegoods? It’s hard to gauge right now. For instance, the proposed electric ChevyVolt is meeting consumer resistance with its mere 40 miles per charge. But then,the company has never been known for quickness and agility when it comes tobringing product to market, so we'll have to wait and see what's next from GM.Though Chrysler is now part of Italian automaker Fiat, manufacturing of the sur-viving brands will remain on American soil but with a much smaller dealer net-work. In the meantime, dealership owners such as Economy Nissan's MontyRoder are doing better than simply holding their own as high quality used vehi-cles become the current gold standard for cash flow.

City planners, some representing a new generation, are optimistically look-ing into the long-term needs of their respective communities with smart growthas the operative phrase encompassing environmental protections in the growthprocess.

Local small business owners are reporting that while sales are not wherethey were a year or two ago, "things could be worse." Effective campaigns pro-moting "staycations" and supporting local businesses have had a positive effectthroughout the county. And according to statistics provided by the Durango/LaPlata County Airport, a modest increase in air passenger traffic is reflected in theincrease in tourist foot traffic amongst local stores. One reliable barometer forlocal tourism has been the sizable crowds aboard the Durango & SilvertonNarrow Gauge Train each morning.

The numbers at the end of the summer tourist season will tell us how visi-tors and locals were spending their discretionary income on goods, travel andlodging.

Nevertheless, despite the collective pain endured by so many business own-ers and their employees, La Plata County has not been hit as hard as otherregions in the state or the nation.

To say that the

recession is constantly

“moving the cheese” for

local business owners, is

an understatement. Still,

there are entrepreneurs

willing and able to make

adjustments to their old

business paradigms thus

finding it easier to keep

moving forward.

%Unbeatable

market reach foryour ad message.

Take advantage of the enormous audience The Durango Heraldprovides to power up your sales.

OK - don’t walk, run to your phone!

Call us at (970) 247-3504 and we’ll help you get your ad campaign started today.

Our great 30-day reach of 86% is available to any business that runs their advertising in The Durango Herald weekdayedition, Sunday edition and DurangoHerald.com. CM&B local market survey, June 2009.



HOW TO TURN MANAGERS INTO

LEADERS ... BEFORETHEY GO BAD

Story by Lynne Sholler

Most of us have worked for The Boss from Hell atone time or another. He or she creates chaos andstress in the department, even throughout an entire

company. Career paths are ruined and long-standing business realtionships are lost.

In short order, they can kill the company brand that took years to develop. Can these managers be saved?

Are they worth saving?

Illus

tratio

n: D

avid

Ohm

an

HR:WORKSHOP


As an employment lawattorney and humanresources consultant,I regularly hear storiesabout bad bosses.

Some abuse theirauthority, make unreasonabledemands, or threaten job security.Others hog the credit, are missing-in-action, or treat certain employees withfavoritism. Then there are the intim-idators, screamers, ridiculers, and iso-lators.

Statistics back up these stories. A September 2007 on-linepoll of 7,740 interviews conducted by Zogby International for theWorkplace Bullying Institute found:• 37% of American workers have been bullied at work.• Bullying affects nearly half (49%) of American workers when

including witnesses.• In 62% of the cases, when made aware of bullying,

employers do nothing.• 72% of bullies are bosses.• 55% of those bullied are rank-and-file employees.

Similarly, in the aftermath of recent corporate scandals, amajority of jurors surveyed in employment cases believed that toomany workers are treated unfairly. See, “How Juries and JudgesAre Re-examining Directors’ Officers’ Duties in the Wake ofCorporate Scandals,” Corporate CounselWeekly (January 2004).

The costs of these bad bosses isextensive: turnover, absenteeism, legalclaims, stress, stifled creativity, lost pro-ductivity, low morale, poor work, sabo-tage, loss of reputation, and difficulty inhiring. Is there hope we may mold mal-contented managers into productive lead-ers? With proper attention and mentor-ing, in most cases the answer is yes.

Effective Transformation

How can this be done? The sameway any business problem is addressed:create a plan, implement it, and evaluateit. Here are the suggested steps:

Tune inMany owners, CEOs or boards choose a “hands-off”

approach to operations, lacking knowledge that a problem exists.Assuming "all is good" by looking only at the bottom line is short-sighted. Those who hold an investment in company success mustfocus on the full picture. Periodic participation and asking ques-tions provides a simple start: “How are things going? Are thereany problems I should be aware of? What weak links are thereto accomplishing our goals this year?” When asked, the infor-mation typically comes forward. Yet, some messengers believethey will be shot, so provide a safe environment for them tospeak. To learn the full picture, consider 360 degree evaluations:ask certain staff, clients, and service providers to rate a manager'sperformance. Each will provide a different perspective with use-ful insight.

Create and enforce policySet performance and conduct expectations including the

obvious: respectful relations with co-workers and clients isrequired. If a zero tolerance policy exists, abide by it withoutexception. Consider creating a corporate culture committed toconstructive communication: an open door policy, fair grievanceprocedures, and conflict resolution practices should all be con-templated. Those practices will become habit in short order.You might think this is too costly, burdensome, or pampering thestaff. From my shoes, the cost of not doing it will be significantlyhigher. Most employees like their work and simply expect to betreated fairly. Enforcement of the policies, regardless of whooffends, demonstrates fairness. Fairness breeds loyalty. Loyaltyincreases productivity. Increased productivity increases profits.

Act promptly and honestlyDo not wait until the yearly evaluation. When you become

aware of a problem manager, nip it in the bud. Have a simple,candid conversation modeling the desired behavior. Avoid gen-

eralities or a long winded rant. Skill andplanning are required: write out honestbut non-threatening language; prepareto diffuse defensiveness; and anticipatethe response and your reply. Adeptowners or managers balance directness,firmness, encouragement, and support.

Consider individualityThere’s not one magic pill which cor-

rects all behaviors. Think about the per-sonality style of the menacing manager.Is she motivated by recognition? If so,create a plan which, upon success,results in an award presented to her at amajor meeting, or a newsletter articleabout her with accolades of adulation.If motivated by technology, entice him

Lousy managerscan send your bestpeople running toyour competition.If this is becominga trend, you need

to review thecause and effect of

migrating talent.


with a new gadget or software. Another may be motivated by aday off with pay or a gift certificate for a massage. Give the indi-vidual what they need. Meyers-Briggs and other personality testscan be found on-line to help decipher individual styles. (www.per-sonalitypathways.com)

Train managersAll managers need professional development regardless of per-sonality style. Franklin-Covey's course, Seven Habits of HighlySuccessful People is an excellent choice. Numerous seminarsexist on topics such as constructive feedback, coaching, rolemodeling, conflict resolution, team building, leadership, andcooperative communication strategies. If budget constraints pre-vent travel, hire a local consultant or trainer. Alternatively, searchfor resources via the Web, library or bookstore. Consider creat-ing your own workshop: Does your attitude support team build-ing? How well do you motivate others? What are the traits ofthe best and worst boss you've ever had? Which traits do youhave? "Homework" such as book or article reading could beassigned to a meddlesome manager. To assure the message isreceived, follow up by asking, "What did you learn? How mightwe apply those lessons here to achieve better results?"

Train staffAlso train employees so they may empower themselves.Consider classes on workplace personality styles, communica-tion, stress management, dealing with difficult people, and con-flict resolution. To save money, send employees to different

seminars, and have them share the lessons learned with their co-workers.

Use carrots instead of sticksPeople naturally are more responsive to positive reinforcement,so reward desired behavior. Implement merit raises, bonuses,prizes, or perks based on the highest 360 evaluation score, pro-ductivity, employee retention, or other criteria important to yourorganization.

AccountabilityOnce a plan to redirect behavior is developed, document it.

Establish benchmarks, an accountability plan, or a correctiveaction plan. State the consequences for failure to meet expecta-tions. Visit the plan periodically and reward successes.

Implementing these steps may transform a bad boss into a pro-ductive leader. Ultimately however, the individual must want tochange behavior and succeed. Some just "don't get it" or are inca-pable of correcting the problem. In that situation, inadequateperformance may justify the last resort: termination. That maysave costs in the long run too, but discuss it with legal counselfirst.

Lynne Sholler is a Durango employment law attorney and CEOof Employer’s Advantage, a human resources consulting firm. She may be reached at 970.375.7756 or [email protected] article does not substitute for legal advice for any specific situation.

La Plata County Business Report Premier Edition

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